Business confidence in the retail sector reached a three-year high in the fourth quarter of 2024, climbing nine percentage points to 54%, according to the latest retail survey conducted by the Bureau for Economic Research (BER).
This marks a continuation of the positive trend observed over the past two quarters, driven by strong performance in several retail categories.
The BER said retailers of non-durable goods, including food, beverages, groceries, cosmetics and pharmaceuticals, saw the highest growth in sales volumes, recovering from a decline in the third quarter.
Semi-durable goods retailers specialising in clothing, textiles, and footwear emerged as the most optimistic group this quarter, the BER said. Their confidence soared to its highest level since the third quarter of 2007, buoyed by substantial improvements in sales volumes and profitability.
Durable goods retailers, however, experienced a decline in confidence, “ending a two-quarter streak in which they were the primary contributors to increased overall retail business confidence”.
The BER said retailers of furniture, household appliances and electronics likely benefited from two-pot retirement fund withdrawals, though their contribution to overall retail confidence diminished this quarter.
Wholesaler confidence recorded a four-year high during the fourth quarter, supported by a demand in the consumer goods sector.
The retail confidence surge aligns with the FNB/BER consumer confidence index, which recorded a slight decline in the fourth quarter, edging down from minus 5 in the third quarter to minus 6. Despite this dip, the reading remains the highest festive season consumer confidence score since 2019 and a marked improvement from the minus 17 recorded in quarter four 2023.
“This corresponds with strong retail sector business confidence and volumes, signalling a recovery in consumer demand. Looking ahead, lower inflation and further interest rate cuts should help sustain momentum in the internal trade sector,” the BER said.
The BER last week said other services sectors remain resilient, with steady business confidence and improved volumes compared with 2023.
The RMB/BER business confidence index increased to 45 in th fourth quarter, marking a recovery from its low of 27 in mid-2023. This improvement is attributed to the absence of load-shedding, purported political stability under the government of national unity, a stronger rand, lower oil prices and recent repo rate cuts.
“Going forward, a lot still hinges on expectations of even lower interest rates and continued governmental stability,” it said.
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